The importance of tax payment in any giving country is not to overburden any business organization or individuals but to also help the government generate meaningful revenue that will be re-invested in the development of the society.
The truth is, no organization be it large, medium or small scale business can escape the payment of tax, except on the ground where government issue such organization tax freedom; a norm rarely common.
Also not forgetting that the payment of taxes also avails business organization the opportunity to access some of the goodies that are always granted to them if they duly play their part properly.
To this end, we will like to share 8 Key methods of minimizing Your Business Taxes in Nigeria
1. Be Flexible with Your Attitude towards Tax Payment: It is very crucial to consider this secret considering the fact that it helps both the large, medium and small scale business to always respect the payment of taxes. Failure to respect it often lead such an organization to fall into the bad book of the law by way of paying severe penalties; something which won’t speak well of such organization.
A correct attitude towards payment of tax would make you save on tax through help from contemporaries and consultants.
2. Proper Comprehension of Tax System: Businesses in Nigeria often find it difficult to understand certain principles guiding the payment of taxes, most especially when it comes to who to address or which tax authority to pay one tax to.
It is very important to always have this at the back of the mind in order not to fall prey to unscrupulous individuals or groups.
3. Identifying the Type of Tax to Pay: This is one area that most emerging businesses always fall prey to considering the fact that they often fail to ask questions, thereby leading to the excessive payment of different taxes not related to them.
This is why the need to consult before embarking on any of this journey becomes proper so as to manage and reduce excessive tax charges from different tax body.
5. Proper Book-Keeping and Financial Records: It’s very vital to ensure that for every payment of tax to any of the bodies be it Federal Inland Revenue Services (FIRS, Lagos State Inland Revenue Services (LIRS) or Local government, there is always need to maintain proper book and records of account. Without these records, legitimate expenditures may not be deductible.”
The following are key points to follow with tax rules
- A system to track your income and expenses. This is easily done with computer-based record-keeping solutions that enable you to handle this matter yourself.
- Procedures to collect and store required receipts and other proof of expenditures. Set up file systems to categorize your receipts (e.g., car-related expenses, meals and entertainment costs, and capital expenditures)
6. Arranging And Specifying Your Expenses: Lots of businesses in Nigeria are always overburdened with many taxes due to the fact that they could hardly organize and classify their expenses. This is very common with small scale business because the average thinking of most businessmen is that they can incur any type of expenses, which is very wrong.
So the simple method to escape such is by doing proper organization and classification of your expenses.
7. Cultivate the Habit of Documenting and Filing: Documenting your business transactions for future Purposes is necessary because you don’t know when it will come handy for you. Always ensure that transaction done such via invoice, payment vouchers, petty cash vouchers, goods received notes, receipts, etc. are properly kept.
Closely related to this is the maintenance of good tax records. Ensuring that all correspondence, returns (VAT, Withholding Tax, etc.), tax clearance certificate and others are filed in a safe place.
8. Engage Qualified Tax consultant: Engaging a tax consultant would always put you through on the “Dos’ and Don’ts of all tax-related issues. This would also ensure that your business doesn’t fall victim to the wrong side of government policies. Such a consultant will carefully set out a plan that won’t only guide the business but help maximize savings and income as regards growth.